View Full Version : A Profitless Mortgage System
Carcano
09-28-08, 09:08 AM
I propose that henceforth the US government adopt a profitless mortgage system in which the government will be the sole issuer of mortgages.
No more private lending for home purchases.
A 5% percent down payment will be required on all lending and the interest rate will be adjustable according to whatever levels are necessary to break even.
The system will ONLY pay for itself. It cannot legally make money...nor can it lose money.
This means that ALL mortgage holders will pay the same rate, but it will fluctuate upwards during economic contractions and downwards during expansions.
This means that ALL mortgage holders will pay the same rate, but it will fluctuate upwards during economic contractions and downwards during expansions.
Why should a person with good credit and a high-paying job have to pay the same interest rate as someone with bad credit and a low-paying job? The entire point of interest is to offset the risk that the person won't be able to pay back the loan. If you are more likely to be able to pay back the loan, you should get to pay less interest.
Carcano
09-28-08, 09:53 AM
Why should a person with good credit and a high-paying job have to pay the same interest rate as someone with bad credit and a low-paying job?
Or why should high income citizens pay more income tax than low income earners.
Or why should people with no kids pay school taxes.
Yes...it is socialism.
Carcano
10-01-08, 08:56 PM
Or why should high income earners pay a higher rate of income tax than low income earners?
Excuse moi...not in America.
Warren Buffet demonstrates:
http://www.youtube.com/watch?v=3z_UrOKtjHk
Stryder
10-01-08, 09:27 PM
It's very easy to come up with ideas on how to fix the world, the problem of course is getting those ideas into practice, especially when you are going against the mainstream reasoning.
An example is the increase in Recycling in the UK, by asking people to sort their rubbish before binning it. This "ideal" was to save money in the long run and lessen overall waste, however the problem is that there is still duplication of effort (someone still has to sort through to weed out the bits people put in by mistake) and most people really can't be arsed to conform. (I mean having two bins that get emptied in alternate weeks can be a problem if the bin fills in the first week, where's the excess go? Obviously not being sorted)
How does this tie into your view/Plan for how the world (or in this case country) should work. Well you are taking the Mortgage system which only exists to make money (The system of lending is not about giving money to people, it's about taking it from them.) and trying to uncapitalised it. Your system obviously wouldn't work because it wouldn't get the backing of theCapitalists which outweigh everyone else, Especially in Government.
The only reason anyone enters into Politics is to earn money, not to save people, not to fix their country but to work out how to make as much money as they can through what ever means they have to.
CheskiChips
10-01-08, 09:28 PM
Yeah, let's abandon democracy and capitalism!
Carcano
10-01-08, 09:59 PM
Well you are taking the Mortgage system which only exists to make money (The system of lending is not about giving money to people, it's about taking it from them.) and trying to uncapitalised it. Your system obviously wouldn't work because it wouldn't get the backing of the Capitalists which outweigh everyone else, Especially in Government.
The only reason anyone enters into Politics is to earn money, not to save people, not to fix their country but to work out how to make as much money as they can through what ever means they have to.
Politicians are extraordinarily under paid...compared to what most of them could be making in the private sector. The prime minister of Canada makes less than the WORST hockey player in the country.
Government tends to be run by people who believe in public sector solutions.
Michael
10-01-08, 10:39 PM
I think in the case of housing it depends on the country. What works in America with all of our open land may not work in Singapore or HK or Japan.
that said, I like the idea.
CheskiChips
10-01-08, 11:19 PM
I think in the case of housing it depends on the country. What works in America with all of our open land may not work in Singapore or HK or Japan.
that said, I like the idea.
You want the federal government to own all land!?
Pandaemoni
10-02-08, 12:40 AM
I propose that henceforth the US government adopt a profitless mortgage system in which the government will be the sole issuer of mortgages.
No more private lending for home purchases.
A 5% percent down payment will be required on all lending and the interest rate will be adjustable according to whatever levels are necessary to break even.
The system will ONLY pay for itself. It cannot legally make money...nor can it lose money.
This means that ALL mortgage holders will pay the same rate, but it will fluctuate upwards during economic contractions and downwards during expansions.
You want the government subsidizing the rich people's buying mansions too? Or are you limiting this to affordable housing? What's affordable? (A 500 sq ft studio apartment in Manhattan in a bad neighborhood is presently on the market for $250,000, and I am told it will sell quick).
In any event if you subsidize something, you get more of it. I am not myself sure I want generous subsidies for home ownership. I myself would like to buy many many properties using your low cost loan program, so I can flip them and use them as vacation homes. :D
Michael
10-02-08, 02:00 AM
You want the federal government to own all land!?of course not, but look, hundreds of thousands of WWII vets were given home loans from the government which moved a massive MASSIVE number of people from renting into their own home. And you know what, it worked out fine.
And the government didn't end up owning all the land.
Carcano
10-03-08, 05:11 PM
I myself would like to buy many many properties using your low cost loan program...
Low cost loan program???
Thats what we have under the current system, with interest rates hovering around zero.
It loses money, and those losses escape into the money supply, thereby devaluing the dollar while creating private profits for the middlemen.
In my system there are no gains...or loses...or middlemen.
I propose that henceforth the US government adopt a profitless mortgage system in which the government will be the sole issuer of mortgages.
No more private lending for home purchases.
A 5% percent down payment will be required on all lending and the interest rate will be adjustable according to whatever levels are necessary to break even.
The system will ONLY pay for itself. It cannot legally make money...nor can it lose money.
This means that ALL mortgage holders will pay the same rate, but it will fluctuate upwards during economic contractions and downwards during expansions.
That sounds almost like Islamic law...no interest...for the poor...
Carcano
10-03-08, 05:30 PM
That sounds almost like Islamic law...no interest...for the poor...
My system isnt designed for any particular group...rich or poor.
I dont consider myself an advocate of either the public or private sectors.
I recognize the public sector is good at some things...like organizing large scale infrastructures and regulation.
And that the private sector is good at other things...like innovation and manufacturing.
Capitalism here...socialism there.
That is what I taught the Chinese 25 years ago...it is called Pragmatism....:D
Carcano
10-04-08, 09:41 AM
its is called Pragmatism....:D
Yes, pragmatism means making decisions based only on what WORKS...not based on conformity to any particular ideology.
If you're going to cut bankers out of it you might want to think about if they will let you do that.
Carcano
10-12-08, 09:56 PM
The big news today is that McCain is pondering the wisdom of cutting investment taxation.
Capital gains tax, dividend tax, etc.
Excellent idea...ALL taxation on investment should be dropped altogether as its a primary reason why people dont invest their money.
If Americans need anything its a consumption tax...not a tax on saving or investing.
Yes, pragmatism means making decisions based only on what WORKS...not based on conformity to any particular ideology.
And we agree....also on not taxing the savings or capital gains....
The problem is without enough jobs which can create the most tax revenues, now every government will be looking for money...from traffic tickets to any kind of fines, property taxes etc....
So, I say, focus on job creation...the tax part can take care of itself....
Carcano
10-14-08, 05:31 PM
So, I say, focus on job creation...the tax part can take care of itself.
US and Canadian politicians have been working hard to deport our jobs to the far east for decades now.
We shouldnt look for a 180 degrees turnaround...any time soon.
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